Uganda GDP Surpasses Lower Middle-Income status of USD1036-Museveni
Africa Opportunities

Uganda GDP Surpasses Lower Middle-Income status of USD1036-Museveni

President Yoweri Museveni was at pains to defend the stewardship of the Ugandan economy in light of a public outcry over rising prices for household essentials and a controversial contract to channel nearly half of the country’s annual coffee production through a Dubai-based private company to process and market abroad as branded products.

He once again dismissed calls for tax reductions and subsidies. He insisted such measures will only worsen the government’s fiscal standing as well as cause further weakening of the Uganda shilling and more hardship all round.

Since beginning of the year, there has been a spike in inflation from three percent to just over six percent as fuel prices have spiraled upward.

Delivering the State of the Nation address on Tuesday, Museveni said in spite of the external shocks mainly as a result of the Covid-19 pandemic and the Ukraine-Russian conflict that have combined to negatively impact global supply chains, Uganda was not doing too badly.

“In spite of all these, the Ugandan economy, by the budget time in the next few days, will be standing at $45.7 billion by the exchange rate method and at $131.6 billion by the PPP method.

This means that the GDP per capita is now $1046. You remember, the entrance points for the lower middle-income status, is $1036.

We have now passed that figure. Congratulations. However, to be declared a middle-income country, you need to sustain this for two to three consecutive years.”

The President spent time to highlight the government’s interventions in accelerating value-addition in the agriculture sector, noting that many of these efforts were the reason for the surpluses for various commodities.

He said the sustained growth of local industry will depend on making greater use of Uganda’s agricultural output.

He said commercial agriculture alone, can create 50 million jobs if one assumes five million households engaged in small scale agriculture and each household employing 10 people.

He also laid out the programme to expand irrigation capacity to help reduce reliance on seasonal rains.

“We have worked with the private sector to produce solar-powered water pumps that the rich farmers can buy and engage in mini-irrigation, farm by farm.

Once the solar powered irrigation pumps are on the market, the government will buy them for some of the co-operatives or farming villages, where one pump can be shared by a number of small farmers.

We shall continue also developing the mega-irrigation schemes of the Mobuku type. Currently, 150 solar-powered water pumps have been imported.

By the end of next year, 687 solar-powered water pumps will have been imported.”

Museveni said, “Our strategy is that anything agricultural that is not consumed fresh, should be processed industrially so that it is preserved to be able to reach distant markets and also to add value to the raw-materials.

We have done this for milk, for cotton, for some fruits (example in Soroti), for sugar cane (tea-sugar, ethanol and industrial sugar), for some plantation products, for some bananas (wines, flour, sanitizers), for some of the maize (flour, animal feed, later ethanol, industrial alcohol).”

The President spelt out the initiatives being implemented to help lift incomes, particularly through provision of credit to SACCOs, whose members can then invest in sustainable enterprises.

He cited Emyooga and the recently launched Parish Development Model. He made it clear that the government is intent on targeting the economically disadvantaged and getting them into the monetary economy.

Turning to coffee, which is currently Uganda’s leading source of foreign exchange along with processed gold and remittances from abroad, Museveni repeated his complaint that the country was still earning very little from the global value-chain.

“Each coffee bean that is sold in supermarkets abroad, takes away our  phosphorous, our nitrogen, our potassium and other nutrients for 10% of the value at which the final consumer buys the product.

90% of the value of that product from our soils and 100% of the accompanying jobs that go with the roasting, grinding and packaging of the product at that stage, are all donated to the outsiders. The total value of coffee in the world is $460 billion.

However, of this figure, the coffee growing countries only take $25 billion,” he said.

According to Museveni, Uganda Vinci Coffee Company Limited fronted by an Italian national, Enrica Pinetti, would change all that.

Through the finance ministry, the government in 2014 agreed terms with Vinci, in a contract whose details only came to light two months ago.

The revelations caused uproar among legislators and leading coffee farmers/processors due its perceived favouritism towards the Italian company. Add to this, queries were raise about the rationale of keeping the deal secret.

Shrugging off the criticism, Museveni said exporters of unprocessed raw-materials, where it is economic to add value, are exploiters.

He said, “When we de-hust, roast, grind and pack here, Uganda will get more dollars and we shall also pay higher prices to our farmers.

The farmers are now cheated because the biggest beneficiaries from our coffee are the external roaster, grinders and packers of coffee.”

“When I met Madame Pinetti, she had no idea about coffee. I, however, could see that she had a wide network of contacts.

I asked her to look into coffee. After sometime, she came back with a positive report that it was doable.

Therefore, those attacking that project are supporters of the perpetual bleeding of Africa,” he said. However, he conceded that further discussions can take place.

Ranking near the top of the government’s budget allocations in the past decade or so, the President touted the gains accrued from modernizing infrastructure. “

The crucial roles of infrastructure are to enable and connect the producers of goods and services and their consumers and do so cheaply – so that the product is not overpriced and therefore, competitive in the market,” he said.

On the other hand, he reminded Ugandans little economic development can be achieved without adequate security as well.

Museveni said the government will have to recruit more personnel and look for the resources to tackle the rustlers that have made Karamoja insecure during recent months.

He said every Ugandan has a responsibility to do their part when they can, especially in enhancing agriculture production, productivity and the conservation of the environment.

“You have seen what can happen to countries when they cannot produce their own food. There is no problem Uganda cannot solve, as I have stated above, as long as we are able to produce most or all of our food.

To do this, you need soil and, above all, fresh water. This means environmental protection – protecting the wetlands – all of them, the river banks, the lake shores and the forests and also planting trees even in inhabited areas.”

Museveni said although corruption in the public sector remains a challenge that is impeding the full value of government economic policies, limiting it also depends on citizens exerting some resistance and reporting the culprits.

Business people are particularly vulnerable and in the same vein castigated those who questioned the contribution of Ugandans of Asian origin.

He said, “Another danger to our rapid social-economic transformation is the corruption of political actors.

Public servants ,who do not only steal government money, thereby denying the population the services that money would have provided, but they also parasite on our business people.

Business people and investors do not feel beholden to these parasites. Expose both their requests for bribes and their schemes for frustrating those that do not pay bribes. Action will be taken for the benefit of the business atmosphere in the country.”

“Finally, on the strategic issues, I must point out the mistake of those who proclaim what they call ‘indigenous’ business people as being more useful to the country than the “foreigners”.

Some people even talk of: ‘Factory y’Omuyindi” – an ‘Indian’s factory’. There are no Indian or Chinese factories ecetra in Uganda. Indian and Chinese factories are in India and China respectively,” the President said.